It would appear that the US stock market is priced to perfection. Meaning any false moves and events that run counter to what the market is expected could cause a cascading decline and increase in volatility. Even though the volatility index, (VIX), that monitors the S&P 500 has remained somewhat elevated trading in the 20 for quite awhile, and the MOVE Index, the VIX of the bond market, has hit all-time lows – the stock market is shrugging all of this off. This in effect saying that there are no major risk events on the horizon, traders/investors are complacent, that volatility is under control due to global central bank policies, and thus there is nothing to worry about. Furthermore, even if something “negative” should occur, there’s no need to worry because central governments and central banks will continue to have the “backs” of the market(s), and will flood the system with further fiscal spending and monetary liquidity injections.
This is no longer a market as they are completely decoupled from reality and the real economy. Yes, printing and spending trillions of dollars around the globe will make things appear ok – but only for a while and with a huge price tag associated with such policies. In addition, US markets seem to be pricing in a clear victory for the Biden/Harris ticket and with it, the prospects of a “blue wave,” meaning the Democrats take control of the House and Senate as well. This means that Trump will not contest the election and take it to the courts – where if this did happen, would go to the US Supreme Court. This kind of “certainty” and complacency that is permeating throughout the markets gives The Kapital News both pause and concern – markets love to surprise. Further, with respect to the MOVE index, might this be the calm before the storm? And if it is, increased and sizable volatility in the bond market will cause volatility to increase amongst many other markets, thus throwing this perfectly priced market into a possible tailspin. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Markets #Debt #Bailouts #Inflation #Gold #Silver #Liberty #Revolution #USA